Do you want to invest in real estate passively and safely? Then get ready to change the way you think about private lending!
Welcome back to the “Inspired To Invest” Real Estate Podcast. This week, we’ve got Marinella Nicolosi with us, an experienced private lender who discovered this strategy as a powerful tool to increase income.
During our conversation, Marinella shares her unique five-step strategy and even talks about her Smart Strategy Masterclass that benefits both lenders and borrowers. She gives us a grand tour of the private lending landscape, discussing different models, from secured investments to promissory notes.
But it’s not all about money for Marinella.
She believes that the real value of financial independence lies in the freedom it provides to choose when to work and engage in life’s passions. Marinella shares her personal experiences with private lending, and how it’s changed her life. She’s not shy about the challenges either, shedding light on recent interest rate rises and government restrictions.
Her practical tips on navigating the relationship between borrower and lender are invaluable. So, join us for an episode that serves as a treasure trove of knowledge for anyone curious about private lending and who wants to invest in real estate passively and safely.
To connect with Marinella, go to @privatelendingqueen on social or https://smartmasterclass.com online.
Thank you to Dijon Properties for bringing us this month’s episodes of “Inspired To Invest”.
To learn more about them, go to @dijon.inc on social.
Tune back in on Wed., Nov. 15 for Episode Twenty-Three for a guest who is focused land development all across Canada, but has a beautiful approach to how she runs her business by putting people first. For past episodes of “Inspired To Invest”, click here.
Thank you for tuning into “Inspired To Invest”, hosted by @serenaholmesrealtor & remember, “when you invest in yourself, the sky’s the limit!”
How To Invest In Real Estate Passively Episode Transcript
Speaker 1
00:01
Welcome to the Inspired to Invest podcast, where we’re sharing stories from real estate investors and how investing has changed their lives. This episode of Inspire to Invest has been brought to you by Dijon Properties. Hey everybody, welcome to the Inspire to Invest podcast. I have a great guest today named Marinella Nicolosi, and before we could dive into our conversation with her, I’ll read a short bio and then, of course, she can fill us in on her journey as a real estate investor.
00:33
So Marinella is a passionate, resourceful, lifelong learner. She’s a proud mother of two children and she is brought up by business-minded people who are both entrepreneurs and real estate investors. So she had a really rock solid foundation from the beginning. In 2019, she joined a real estate education network where she learned about various real estate investing strategies, among them being private lending. So she’s a passionate private lender, like me, and she’s built a solid network of borrowers and lenders, and she also launched her own course in 2022. So this, in particular, is called Smart Strategy. It’s a five-step strategy that she uses daily to help her achieve great results in private lending, and she shares her knowledge of this and teaches others about this entire strategy with her smart masterclass. It’s a private lending course based on the Smart Strategy, and it’s designed for both passive lenders and active borrowers. And since my voice is not great, I’m going to pass it over to Marinella and she can fill you in on her foundation and basically what life looked like for her before she really got into real estate and private lending.
Speaker 2
01:38
Yeah, thank you for inviting me, Serena. This is a real honor to be here and, knowing that you also are a private lender, it’s nice to connect with the other private lenders. The reason why I started private lending is because I wanted to increase my income, and when I found out that I could use my own money to fund projects and I didn’t have to do anything else so being a person just to have my money working for me, to me that was like a godsend strategy, because at that point I had, like you know, I have two kids, I am a single mother, I had a full-time job and I did not have time to search for properties and I didn’t want to deal with tenants. So you know, and I’ve done a lot of flips throughout my life, so I know what it means to deal with the contractors and I didn’t really want to do any of that.
02:34
Yeah, so you know, when I discovered the private lending strategy and I could actually increase my income with that, it really opened up a whole new world for me and I’m happy to share my story because there’s a lot of people out there who have no idea they can access, let’s say, the equity of their home or that they might have registered funds, they’re sitting in investments, they’re doing next to nothing or they’re even losing money and they can put them to work with private lending and gain, make some really good gains with it. And as a private lender, you know that you can generate a minimum of 8% to 10% on any you know first position mortgage Right. So those are really great returns and you know, depending on the risk of the investment, you can generate even more depending on how experienced you are as a private lender. But I usually say, if you’re just starting, make sure you educate yourself. And then, you know, start small and slowly and usually with a secured investment which helps you. It’s a gives you a little bit more security.
Speaker 1
03:48
Yeah, now for anyone out there that’s watching that may not know a lot about private lending, can you lend what that means to be in a secured investment first position, second position, unsecured. Just so that they understand what those different models look like.
Speaker 2
04:01
Yeah, absolutely so. For those ones who are new to private lending, first of all, as a private lender, you basically you become the bank and you private lending means that you are lending your own money as an individual or as a corporation, like as an entity, to other individuals or corporations or any other entity. There are different legal structures that can be done. So and at that point you, as a private lender, you have your funds. Let’s say you have, you know you have cash that you can invest. And because you are the bank, you’re going to have to hold your diligence process right and vet your borrowers, vet the projects. When you’re satisfied with it, you can invest in mortgages. So mortgages come in a first, second or third position, and first position is where you are on title on on the actual real estate asset and you you know. And when you are on a second position, it means that the person who are on title on the first position, when it comes to repaying the mortgage or the loan, you, when the person in first position, has priority over the second position or the third position, and so, and that’s how it works. So if you are in second position, you come second to be paid, which means it’s a little riskier because if, for example, there isn’t enough money within the deal, you risk not to be paid back your loan. And so, as a as a parable lender, you’re going to have to make sure that you that there is enough equity or there is enough that the borrower has the capacity to repay you from other sources if there isn’t enough money within the deal. So and those are the things that you need to check as an insecure, they usually, you know, you do basically promissory notes or loan agreements, you know, and those ones are a lot riskier because at that point you have no idea what you stand within the lineup of all this borrow, all these lenders. So again, that means that you have to do your due diligence before you can ask the borrower exactly where you stand in line. Is there a hundred promissory notes, or there is maybe two or eight or five, or you know where are you within that project or where do you stand in line? Yeah, that will tell you the risk. Also, the risk is calculated in many different ways. Right, that is a whole risk management.
06:45
You know strategy that you have to put in place as a private lender and and it isn’t just knowing the loan to value. It isn’t just knowing you know the exit strategy. There is a whole process that you need to put in place as a private lender to understand the risk of the investment itself and understand the risk of the investment itself and understand the risk that you are putting within. Also, the borrower itself. Is that a risky borrower or not? So those are all things that you need to do.
07:14
So, again, you have to implement those risk management strategies that will help you eliminate or reduce your risk and because, probably, honestly, it’s all about prevention, because once you are in court, it’s way too late. You never want to end up in court because at that point there is a lot of fees or legal fees and which you may not ever recover. Yeah, depending on the loan, you might not even be able to get your money back. So it’s a. So, like I said, you want to implement those risk management strategies before, do really good due diligence on the borrower, the project, the market analysis. You know there’s all a whole lot of things that you can do to prevent. There’s a lot of the augmentations that you need to ask as well.
08:06
I am very often I feel like a lot of people take private lending lightly, because you need to really know your boarder really well and you need to dig and for those boarders who are not an open book, just walk away because it’s not worth it. If they’re willing to share about themselves and their capacity to repay the loan and the net worth and there’s a lot of information that you can get from them then work with them because then they’re open to share if they’re really worthy to get your money Because they have to read. A good boarder is those boarders who will take responsibility for your money and they do not just take your money and be happy with that. As a lender, you really need to find those boarders who are trustworthy and take responsibility for the loan that you’re giving. As a boarder, I can say you also have to make sure you do your diligence on your lender, because you need to know where the money comes from.
Speaker 1
09:10
It could be anyone who has maybe doing money laundering right, so you don’t want that, I think there is a lot to know in that respect, and I think one thing, just from that perspective of a lender, is that a boarder is not necessarily going to hand everything over to you, but if there’s extra due diligence that you want, then you can always ask for that stuff right, like proof of insurance, credit checks, asking to see who else is on title, like backup documentation that they own the property.
09:37
There have been some instances with what I’ve learned to you where there’s other people on title. So I’ve said, well, I’m not comfortable signing this unless everyone’s in the agreement and I have information on everybody, because at the end of the day, like they’re obviously all parties if that’s the case. So I think it’s always better to do more than less. Obviously, I have legal representation, but when you look back now, like obviously your parents were real estate investors and entrepreneurs, but you’ve only been doing this now for about four years. So what was that catalyst where you’re like I’m going to, I want to change things and kind of take advantage of some of these things that are out there.
Speaker 2
10:10
Yeah, that’s a great question. I actually, when I was growing up, I didn’t really want to have anything to do with real estate. I even told my parents not to, because they had a lot of properties not to leave me anything. I honestly told them don’t really like, just give it to my sisters. They obviously did not, but it’s, yeah, growing up because I could see they’re you know they was because they were active investors.
10:39
It involved a lot of work and so, but at that point, because I narrated a whole bunch of money and I felt the responsibility honestly because my I saw my parents working really hard through other life and I had this money and and I had properties in Italy where they’re my parents’ property. But they left it to me and my sisters and we had to, you know, figure things out right. So I felt really responsible because they worked really hard and they left us all this stuff and this wealth and and at that point I felt like I didn’t, I knew nothing, so I didn’t want to waste the money, because you can lose your money really fast if you’re not educated. So at that point I felt I needed the need to educate myself and so I invested in myself. I believe in education First. I don’t get into something unless I know the ins and outs of whatever strategy I’m doing, whatever type of business I’m doing really. And so I educated myself.
11:50
When I felt comfortable, I started investing and and since then and not only I also had the need to increase my income, and I wanted to because of my parents. Like I said, they worked really hard but then they fell sick and they died within like a year and a half from each other. That was a little bit of a shock for me because I saw them, you know, not be able to enjoy their life at the end right, and when they were ready to retire and they were ready to enjoy life, their life was cut short. So I saw also in pre-relanding the opportunity to not only increase my income but also enjoy my life now, at this moment, this present moment, and you’re not working like a regular job anymore, right.
12:42
I left my job. However, I’m actually considering to going back. To be honest, the reason is because I miss the interaction I miss where I work, in the school system, and I miss my students. I miss talking to my like I am. I specialize in behavior and I specialize in mental health and I miss helping those little kids because I work in the, in elementary school and, honestly, they are the most precious thing that you can have around you because they really feel you are, and I really miss that part and the interaction also with my colleagues. So I am considering to going back because of that reason. However, I, with pre-relanding, I was able to become financially independent and it gives me the opportunity to decide whether I want to work.
Speaker 1
13:39
Honestly, it’s really powerful in the sense that, you know, even for me, like I didn’t necessarily choose to leave my job, like I had my own business, the COVID happened so I couldn’t actually run my company anymore and fortunately I found private lending prior to that and I’d been doing it already but I was able to increase it relative to the fact that I couldn’t work and I had more money that I could invest. But, like you, I think that it’s important to have that sense of purpose and fulfillment in whatever it makes sense for you, you know. So I think if you are passionate about the children, like, that’s something you can do. You know, for me, I found that I love sharing this message, just because it’s so powerful and people don’t realize what’s out there, just how many options there could be. So oftentimes, after you’ve shared this message, people reach out and are like how do I do this? I need this, and you know that you’re having that positive impact and kind of sharing that message right.
Speaker 2
14:33
Absolutely, and that’s why I’m here, because it’s important to learn about other people’s experiences and what they’ve done in life and what options are out there. Because, as a private lender, you can still do your work. If you have a full-time job which you love, you can still do it and you don’t have to leave your job because really it’s your money now. It’s working for you. You don’t have options.
14:55
You have lots of options, and that’s why it’s important to learn about what other people are doing and have an open mind, because you can learn from so many other people out there who have done really well with whether it’s real estate or any other strategy, and why not? Why not learn from others who have been successful?
Speaker 1
15:19
Yeah, absolutely. Now, obviously, you’ve taken a bit of a different path. It’s been on the more passive side. When you look back now the last few years, what would you attribute your greatest success? Just having the ability to leave your job. For everything else that comes to mind.
Speaker 2
15:35
Honestly, my success is the ability to really decide what my schedule is. I am very detached when it comes to money. I’m not chasing money and I’m not attached to money. I have a very detached approach to it. I use money as a tool to help me live a good life. So, for me, the best success was to be able to enjoy the people in my life, to be able to decide whether I want to go back to work or not, to be able to be in charge of my own time.
16:09
Honestly, the money is a secondary thing. Honestly, money, when you die, is not coming with you. It’s left behind. Whatever property you have, again, it’s not coming with you. You live it behind you. So, unless you leave your life now, honestly enjoy your life now while you can. So for me, the success you know private lending is giving me that success, because it’s about being able to enjoy the people. Enjoy the things that you want to do. I love dancing, right. I love traveling. I love discovering other cultures and I want to do those things more and more, right. This is what I’m an artist and I really miss going, you know, like being able to find the time to paint or, you know, do the techniques that I like to implement, you know, as an artist. So those are the things that I want to enjoy and that’s why I love private lending, because it’s giving me the opportunity to now really enjoy my life. Now I know when I retire, to me retirement it doesn’t even exist.
Speaker 1
17:23
I think it’s just a mindset shift right and a lot of times I’ve even talked to you like they retire and then they, you know they, they either go downhill or they go back to working, because they need that sense of purpose every day. But that said we’re just going to take a really short break just for our word from our sponsors.
Speaker 2
17:38
The Dijon vision is to add value and create beautiful spaces that make a positive impact. We transform homes and lives and believe that everyone deserves a beautiful home.
Speaker 1
18:07
Thanks again for following along with this episode of Inspired to Invest. In addition to real estate investing and running my own brand experience agency for 18 years, I also published a book called the Accidental Entrepreneur in October of 2021. This is my story and it chronicles how I turned tragedy into triumph to embrace my destiny in entrepreneurship. If you’re interested in picking up a copy, you can find the link at SerenaHomesRealtorcom and you can also find my link tree with all of the retailers in the details below. Thanks again for your support. Hey everybody, welcome back to Inspired to Invest. I have Mary Nell and Ikelosi here talking about private lending and how she’s taken this approach to real estate investing. Now we talked about the success that you’ve had. I want to touch now on any challenges or obstacles that you’ve experienced in the last few years since you started going down this path.
Speaker 2
19:01
Yeah, some of the challenges is funding, I would say, the right investments.
19:11
Right now, like during these actually really hard times, I had to rethink my whole investment strategy, like my lending strategy, and because I, within the last year or so, I find that there has been a lot of borrowers or been struggling because of the hike of the interest rates, and also there’s a lot of new laws in place. There’s a lot of restrictions that the governments have put in place, which has made things really hard for borrowers and any active investors. So I notice that really, the risks have gone up a lot, and I can tell you that, even though the interest rates have gone up, in general, borrowers haven’t really understood that the risks have gone up as well, and so a lot of borrowers haven’t really upped the game and rewarding the lenders appropriately, to be honest with you. So I see that a lot of the rates are still very low compared to where they should be, compared to the risk, and this is something that puzzled me because, yeah, because the risk has gone up, but the borrowers are not really raising their rates either.
Speaker 1
20:34
Yeah, I mean I think what I’ve seen as well, like I’ve been fairly fortunate, like there are. There’s one mortgage broker that I work with and they have NSF fees in place, so they do pay late. You know that fee could range from $100 to $250. So there are a few borrowers that have consistently paid late and I kind of look at it like they’re still paying, but they’re paying like a week or two late consistently, but then I’ve made a lot more money because of it. But it begs the question, like at what point will be their breaking point, right? Like will there be a time where they really struggle or maybe they have to sell off a bit of their portfolio? But I think that’s where it’s important to understand the full picture with them. But they have an asset that they can sell to take care of those debts, right.
Speaker 2
21:14
So just trying to understand. That’s exactly. Yeah, that’s exactly it. However, I have to say that, as a borrower, you need to work your numbers before and you need to calculate those risks before, and that’s what I see that a lot of borrowers are not foreseeing things. They are not really implementing a lot of the preventative measures that they’re supposed to, and that’s where I feel that the risk gets higher because, they are not doing really proper due diligence, they’re not putting the measures in place to prevent those downfalls right.
21:57
So those are the things that I see and but in general, I mean honestly, there’s a lot of great borrowers out there, there’s a lot of people who know what they’re doing and sometimes there are you cannot see, you know downfalls. There are things that you cannot control and absolutely that can happen. However, there’s a lot of things, a lot of measures that you can put in place as a borrower and contingency funds or you know there’s a lot of, you know, pre-planning that you can do and if you really understand the risk of the projects, of the investment that you are in, and if the numbers really work, you know, and you know that you have to, if you already plan to give a certain amount of money, certain percentage, to your lender and the war and the numbers work, you know you create those win-win situations. But it’s those cases where the borrower wants to, you know, make the deal work at the expense of the lender, which I’m nobody happy about.
Speaker 1
23:15
Yeah, no, I can understand that. I mean I have heard of isolated situations where things have happened where maybe a borrower defiled it on a property and things like that. I wouldn’t say it’s overly common. Like most of them have integrity, they put their lenders first.
Speaker 2
23:29
They don’t even take a hit or go break even because they don’t want to compromise on their reputation and their ability to service future projects right, yeah, yeah, there’s a lot of great borrowers out there, but I have met a few who are not really thinking for the lender, for the lender, they’re just thinking about themselves.
Speaker 1
23:48
So just be aware of those as well, because you can say no right, yeah, I mean, and trust your instincts, right, like there’s been some that I’ve talked to and, just based on how they communicate, is like you just immediately get that feeling right. So I think you make sure that you’re looking up for yourself and it’s aligned with everything you’re looking for as well.
Speaker 2
24:06
Yeah, yeah, absolutely. You talk a lot about educating yourself.
Speaker 1
24:09
What do you think is some of the best advice that you’ve received?
Speaker 2
24:14
Two be cautious. And two again, to do a lot of screening. You know, understand who the board of directors is Like.
24:28
I find that it’s important to invest in people more than you know the money itself. To me it’s. You know, there are people like, yeah, but I don’t want to. You know, make friends. You don’t have to make friends. You just need to understand where the relationship stand with the boarder and if they’re, you know if they have the capacity to repay the loan. If they, you know, you have to establish a working relationship. Right, that’s where you have to establish a working relationship, whether you become friends or not. That’s. That’s a different level of things, but you have to establish that working relationship also, because if you’re not an accredited investor, you have to.
25:10
If you fall within the family and friends and you meet somebody for the first time, you cannot invest with them because you’re not a friend when you’re with them the first time. So those are the things that you need to understand. There are laws in place as well, and if you want to be part of this game, you have to respect the laws as well. Yeah, and you need to know what they are, what the rules are, yeah, and so those are the things that you need to really understand. That’s why you have to educate yourself. Yeah, no, there are rules in place and you need to respect them. If you want to, you know, do well.
Speaker 1
25:44
Yeah, no, agreed Now, obviously you talked about your, we talked about your course, but can you share a little bit more information about what’s involved in that for someone that could be interested?
Speaker 2
25:54
Yeah. So my Preval Ending course, the master class, is a comprehensive course, so it teaches you everything really about Preval Ending and especially on the due diligence side of things, because there is a lot of documentations that you can request. There is a like a due diligence checklist that you can basically need to do in order to protect yourself. And so it’s both for, I would say, beginners, for someone who knows nothing about Preval Ending, but it’s also for you know, active investors, boardwriters or anyone who is already, you know, has some kind of experience. The reason is because, with my course, I really give you a really good perspective on the lender side of things, and this is what a lot of boardwriters miss. This is what I find that a lot of boardwriters do not understand what the lenders really wants. So with taking my course, you become very attractive boardwriters because now you’re putting yourself in the shoes of the lender, you know exactly what to give to them and how to present your deals as well. So I teach about Preval Ending. I also teach about mindset, the growth mindset. It’s very important to have a strong mindset and understanding how to deal with any you know problem that may arise, because problems will arise, because problems will always arise if you are a private lender or a boardwyr, so you need to know how to deal with that. And we also talk about you as a person or as a professional, and we talk about skills. What are the skills that you already have, which are the ones that you can, you know, need to develop? Because what I noticed is that I’ve, throughout all my life, like I said, I believe in education I’ve developed a lot of skills, and every skill that I developed it really came handy to contribute to my success. So I always try to let people understand, okay, what is that you have to offer to yourself and others. So I help them reflect.
28:10
So, and also I teach about the basics of marketing and design because, honestly, I feel that a lot of people fail in that day. You have to. Whether you are like a, you know a private lender or you know a boardwyr or any investor, you need to present yourself. You need to know how to present yourself. You need to solve your own, you know reputation, your credibility. If you don’t know how to do it, nobody’s going to believe you and nobody’s going to be attracted by you, right? So everybody honestly, everybody knows my name. A lot of people already know me when they say, oh yeah, the prevalent in Queen, this is my name. I will say, right, why I did that. It didn’t like happen overnight. I established myself, my own reputation and my credibility. Yeah, and how I did that through marketing, right.
Speaker 1
29:08
So, and it’s how you ultimately branded yourself right? That’s right you brand yourself.
Speaker 2
29:13
If you don’t know that, then you fail. Like you are not going to be able to attract anybody you know be able to put yourself out there.
Speaker 1
29:21
Yeah, no, I think that makes perfect sense. Now, obviously, quite the journey so far. Are there any quotes that you find that really motivate you or inspire you?
Speaker 2
29:31
Yeah, actually, you know what I found one which just yesterday from Leo Tolstoy is, once we’re thrown off our habitual paths, we think all is lost.
29:43
But it’s only here that the new and the good begins. And it’s totally true, because sometimes we need to reset. We need like a reset to life, to to grow even more, and sometimes I would say that most of the times, actually, if something bad happens or a setback happens, it really helps you reflect on understanding the mistakes that you made and help you grow even even further and help you become a much stronger person than before. So you know, and I have to say that every mistake that I’ve made in the past, you know you have to face it. And unless you face your mistakes and you understand, instead of dueling on it, just move on, because that’s where your learning is happening. Right, yeah, do the on it, just learn from it and move on. Yeah, and see, you know, usually the I would say that the solutions of the problems that are within the problem itself, yeah, and understanding what is that you’ve done wrong, yeah, no, I think that’s great.
Speaker 1
30:50
So that’s that I know we’re going to just kind of wrap up. Your information has been here on the screen and we’ll include that below. Thank you for taking your time today, obviously, to check that and for anyone watching. If like what you’ve seen, make sure you subscribe and you follow along at inspire to invest podcast and remember, when you invest in yourself, the sky’s the limit. Thanks so much for tuning in.
Speaker 2
31:11
Yeah, thank you, serena, for having me and for anyone visit the prevalent in Queencom and if you want to get in touch with me, right? Thanks everybody.
Speaker 1
31:20
Thanks again to our sponsor, Dijon properties, for bringing us this episode of the inspired to invest podcast. The views represented on this podcast are for general information only and does not constitute investment or other professional advice or an offering of securities. The hosting guests featured on Inspired to Invest make no representations as to the performance of any particular investment. Should you decide to make an investment, you are responsible for conducting your own review and analysis. It is recommended that you obtain independent legal accounting and tax advice from licensed professionals.